Readings Ch. 11: Interpreting Financial Statements BYP11-4 BYP11-4 Marriott Corporation split into two companies: Host Marriott Corporation and Marriott International. Host Marriott retained ownership of the corporation’s vast hotel and other properties‚ while Marriott International‚ rather than owning hotels‚ managed them. The purpose of this split was to free Marriott International from the “baggage” associated with Host Marriott‚ thus allowing it to be more aggressive in its pursuit of growth.
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Harvard Business School 9-282-042 Rev. September 15‚ 1986 Marriott Corporation The idea of repurchasing shares was no stranger to Bill Marriott by January 1980. Almost five million shares of common stock had been repurchased on the open market by Marriott Corporation during 1979 at a total cost of $74 million and an average price of $15.16 in the belief that they were undervalued—a belief that still was not fully reflected in the market price. At $19 5/8‚ the stock was selling at only six
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HBR Case #1 Marriott Corporation: The Cost of Capital Group 16—Tutorial Mon 11:30am Group members LIU Ying‚ Chloe | 1155019350 | LUO Yingying‚ Irika | 1155020931 | TIAN Tian‚ Sarah | 1155019114 | WU Jiajie‚ Jesse | 1155019061 | 17 September 2012 Executive Summary By 1987‚ Marriott Corporation had grown into a large multi-dimensional company with over $5 billion assets in lodging‚ contract services and restaurants. The company enjoyed fast growth in both sales and assets at around
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Question 6 What is the cost of capital for the lodging and restaurant divisions of Marriott? Answer: The cost of capital for lodging is 9.2% and the cost of capital for restaurants is 13.1% Calculation: WACC = (1-t) * rd * (D/V) + re* (E/V) Where: D= market value of DEBT re = aftertax cost of equity E = market value of EQUITY V = D+E rd = pretax cost of debt t = tax rate To calculate the formula above‚ we need to determine each component Tax rate (t) 56% --> calculated before LODGING
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they are applying‚ and compensation-related challenges they are facing. Marriott International‚ Inc.-formed in 1993 when Marriott Corporation split into two separate companies-is the world’s leading lodging and contract services company. Marriott International has two operating groups: Marriott Lodging‚ which generates about 60 percent of company revenue‚ and the Marriott Service Group‚ its contract services operation. Marriott Lodging manages or franchises more than 1‚350 lodging properties under
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Case 1- Marriott Corporation: The Cost of Capital Some preliminary questions: 1. What do you think about Marriott’s policy of repurchasing shares? Repurchase whenever stock price < warranted equity value Does this mean the market is inefficient? 2. Why does Marriott manage rather than own hotel assets? Finding limited partners on a hotel project is equivalent to selling private equity in the project Is there any reason to
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1. How does Marriott use its estimate of its cost of capital? Does this make sense? Marriott has defined a clear financial strategy containing four elements. To determine the cost of capital‚ which also acted as hurdle rate for investment decision‚ cost of capital estimates were generated from each of the three business divisions; lodging‚ contract services and restaurants. Each division estimates its cost of capital based on: Debt Capacity Cost of Debt Cost of Equity All of the above are
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| Case Study 2 | Marriott International | | Andrea Blubaugh | 10/22/2012 | BACKGROUND In 1927 J. Willard Marriot and his wife‚ Alice opened a root beer stand in Washington D.C.‚ the Hot Shoppe. They served tamales‚ chili‚ and tacos during the winter months. In 1929 Hot Shoppes was incorporated in Delaware as Hot Shoppes Inc. Hot Shoppes went public in 1953. Marriot’s first hotel‚ the Twin Bridges Marriot was also opened in Arlington‚ Virginia. In 1966 Marriot acquired an airline
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April 11‚ 2012 Marriot Corporation: The Cost of Capital Background: Marriot Corporation began in 1927 with J. Willard Marriot’s root beer stand. Over the next 60 years‚ the company grew into one of the leading lodging and food service companies in the United States. Marriot has three major lines of business: lodging‚ contract services‚ and restaurants. Lodging operations included 361 hotels‚ with over 100‚000 rooms that generated 41% of sales in 1987 and 51% of profits. Contract services
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Revenue/Employee 97‚669 137‚632 The Marriott is very below average for everything. I would not buy the Marriott’s stock. This is because they are below in everything. If I was to buy a hotel stock‚ I would want a stock that is above average in every category or at least close to the industry norms. Marriott is an American hospitality company that franchises many diverse types of hotels and related lodging facilities. Marriott was founded by J. Willard Marriott in Washington‚ D.C.‚ United States
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